AMD May Establish a New Foundry Next Week.

A report from Reuters claims Advanced Micro Devices has shortlisted Dresden, Germany, as the location for the company’s new semiconductor foundry. The groundbreaking could take place as early as late next week provided that the world’s second largest microprocessor maker and German’s authorities set up all necessary legal procedures, the report says.

Additional details about the fab are not yet available, though, SiliconStrategies outlined the cost of the new foundry - 1.1 billion Euro ($1.3 billion). The sum is not huge at all, moreover, it may be considered as strangely low, to tell you the truth. As AMD’s Chairman Jerry Sanders admitted at Semico Summit conference in Scottsdale, Arizona in early March this year, the cost of a leading-edge fab is heading towards $4 billion. Analysts estimated that a bit less advanced facilities that make use of 0.13 micron technologies cost around $2 to $3 billion some time ago. Total investments in AMD’s Fab30 also located in Dresden, Germany are expected to reach $2.5 billion by 2003, while the initial investment was about $1.9 billion.

“The only thing we need now is approval from the parliament committee on the 336 million euros ($396 million) loan guarantee,” a source told Reuters in the report. “We could have the groundbreaking for the new plant as soon as the end of next week.”

Currently AMD has $1.08 billion in cash. In case it receives a loan of approximately 0.4 billion, it will have just enough funds for the fab, if the information concerning its cost is correct. Generally, executives do not like to invest the all available cash.

“AMD has a preferred site, but we have not finalized the negotiations (with the authorities). We will be able to say more later this quarter,” the spokesman for AMD told Reuters.

AMD’s intentions to set up a new manufacturing facility became quite clear back in late-2002, about ten months after the company’s Fab30 reached the full build-out. In the last quarter of 2002 the firm signed a MOU with UMC for the joint ownership and operation of a 300mm wafer fabrication facility expected to begin production in 2005 in Singapore. Infineon AG also had plans to join AMD and UMC in building and owning the fab. As part of the agreement, UMC might also serve as a foundry partner for AMD processors, with first production expected to be available in 2003. The deal has never been closed – AMD produced its 0.13 micron K7 parts in Fab30 and has had no plans to outsource its 90nm SOI microprocessors to Hsinchu, Taiwan-based United Microelectronics Corporation. Foundry joint-venture prospects are also unclear.

Earlier this year there were rumours about possible collaboration between AMD and IBM on a new foundry for the former. However, the possible agreement has not been made official.

In January 2003 AMD and IBM inked an agreement about collaboration in development of on 65 and 45nm technologies to be implemented on 300mm silicon wafers. Under the terms of the agreement AMD and IBM will be able to use the jointly-developed technologies to manufacture products in their own chip fabrication facilities and in conjunction with selected manufacturing partners. Currently engineers from AMD and IBM are working on future-generations of semiconductor technologies in IBM’s Semiconductor Research and Development Center (SRDC) in IBM’s East Fishkill, New York facility.